Apple blamed a surprise decline in China revenue on supply disruptions, predicting it will return to growth in the world’s biggest smartphone arena as the iPhone 17 gains momentum.
Revenue dipped nearly 4 per cent to $14.5 billion (€12.5 bilion) in the three months through September, the company said Thursday.
That was well short of the $16.4 billion projected by analysts on average, leaving the company with only a single quarter of growth in a key market over the past two years.
But chief executive Tim Cook expressed confidence about performance in China and the new iPhone 17’s reception.
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“It was basically supply constraints that drove the results,” Mr Cook said on a conference call with analysts. “We’re thrilled with what we’re seeing right now.”
China was a prominent topic, with analysts asking about it multiple times. Its government and local companies have struggled all year to spark growth in consumer spending, lavishing subsidies and discounts on reluctant shoppers.
The threat of higher tariffs has also disrupted a global tech supply chain that’s already in flux because of longer-term decisions to diversify away from China.
Smartphones have started to show signs of bouncing back, however, as the iPhone 17 and 17 Pro got off to a fast start in September and carried on with 29 per cent year-on-year China sales growth in the first two weeks of October, according to Counterpoint Research.
Apple has been contending with stiffer competition from local brands in recent times. Huawei Technologies took the top spot in June, as its campaign to reclaim a bigger share of the premium tier resonated with consumers.
Beijing-based Xiaomi Corp also made a splash with its Xiaomi 17 series, which in turn triggered other contenders to accelerate their product launches.
Even so, Apple’s upgraded and redesigned iPhone 17 products are drawing consumers back to stores, and the novel iPhone 17 Air may add another boost to interest this quarter.
Mr Cook said that Apple’s store traffic is up significantly in China, and that the latest smartphone generation has been well received.
Apple’s total growth projection for the December quarter – between 10 per cent and 12 per cent – would be a huge jump for one of the world’s highest-earning companies.
He didn’t specify how much China would contribute to that, but noted that Apple reached a new high for September-quarter revenue from services in the country and reiterated that the iPhone is doing very well.
“There are a lot of moving parts working in Apple’s favour, including a mid-Autumn festival pushed back into October, an 11.11 sales period pushed forward, and Covid upgrade cycles hitting – it’s a perfect storm,” said Counterpoint analyst Ivan Lam.
Meanwhile, Amazon forecast quarterly revenue largely above Wall Street estimates on Thursday on strong demand for its cloud services as businesses continue to spend relentlessly on artificial intelligence.
The massive cloud demand is helping the tech company ease the pressure from weaker growth at its e-commerce business, which is gearing up for the holiday season amid weakness in consumer confidence stemming from global trade uncertainty.
Amazon projected net sales of between $206 billion and $213 billion in the fourth quarter, while analysts on average were expecting revenue of $208.12 billion, according to data compiled by LSEG.
Its cloud unit, Amazon Web Services (AWS), reported a 20 per cent rise in revenue in the third quarter ending in September, compared with the estimates of a 17.95 per cent increase.
The strong results from AWS, the world’s largest cloud provider, followed stellar cloud revenue growth reported on Wednesday by Microsoft’s Azure and Google Cloud, the number two and number three players in the industry, respectively.
Microsoft, Google-parent Alphabet and Facebook owner Meta all announced plans for higher annual capital expenditures as they pour money into chips and data centres.
AWS typically accounts for a little more than 15 per cent of Amazon’s total revenue, but the segment is a huge profit engine, making up roughly 60 per cent of the company’s total operating income. The unit reported revenue growth of 17.5 per cent in the second quarter. – Reuters and Bloomberg
